KONEW CAPITAL INTERNATIONAL LTD v. LEE CHI SANG AND ANOTHER

DCMP 4703/2021

[2022] HKDC 841

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS NO 4703 OF 2021

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BETWEEN

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DECISION

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Introduction

1.  At the hearing on 4 August 2022, I granted an order in terms of the reliefs sought by the plaintiff. Here are my reasons.

Acknowledgment of service

2.  Both the 1^st and 2^nd defendants entered an acknowledgment of service on 12 and 14 January 2022 respectively stating that they are not going to contest the proceedings. Thereafter, they took no step in the proceedings.

3.  The notice of appointment to hear originating summons was served on the 1^st and 2^nd defendants by ordinary post at their address for service on 14 June 2022.

4.  I am satisfied that the 1^st and 2^nd defendants have due notice of these proceedings and hearing and they have chosen not to take any action nor to appear.

The plaintiff’s case

5.  The plaintiff is a licensed money lender.

6.  The 1^st and 2^nd defendants are the registered owners as joint tenants of Flat 4, 32^nd Floor, Block B, Fung Shing Court, Nos 2-6 (No 4) Fung Shek Street, Shatin, New Territories, Hong Kong (“the property”)

7.  By a mortgage dated 15 May 2019 (“the Mortgage”), a second mortgage dated 16 January 2020 (“the 2^nd Mortgage”), the 1^st defendant as borrower of one part and the plaintiff as the lender of the other part, the 1^st defendant charged his interest in the property to the plaintiff to secure the repayment of the general credit facilities to the extent of HK$1,500,000 and HK$500,000 respectively.

8.  By a loan agreement dated 16 January 2020, the plaintiff lent the sum of HK$1,750,000 to the 1^st defendant at the interest rate of 30% per annum.

9.  The 1^st defendant made default since 16 October 2020. The outstanding principal at the commencement of these proceedings is HK$1,719,429.15.

10.  The 1^st defendant was adjudged bankrupt on 11 January 2022.

11.  By the order of Master Phoebe Man dated 27 May 2022 in HCB 6747/2021, leave was given to the plaintiff to proceed with the present action against the 1^st defendant.

Money judgment

12.  The plaintiff’s case is not controverted and I accept it at its face value.

13.  I am satisfied that the plaintiff has in form and in substance complied with the requirements of a moneylender’s action under Order 83A. The plaintiff is entitled to recover the outstanding principal of $1,719,429.15 and interest.

Order for possession

14.  Clause 5.01(b) of the Mortgage provides that:-

“(b) the Borrower makes default in the payment on the due date and in accordance with the terms and conditions relating thereto of any principal or interest or other moneys outstanding and payable by the Borrower under and (sic) term loan account (whether demanded or not)”

constitutes an Event of Default.

15.  Clause 6.01 of the Mortgage provides that:-

“If any Event of Default shall have occurred then it shall be lawful for the Lender at any time thereafter without any consent on the part of the Borrower or of any person to:-

(a) enter into and upon and take possession of the Property and for that purpose to take any legal proceedings and thenceforth to hold, possess and enjoy the Property and to receive the rents and profits thereof without any lawful interruption or disturbance by the Borrower or any other person”

16.  Clause 7.1 of the 2^nd Mortgage provides that the lender shall be entitled to declare all or any part of the security immediately enforceable if the borrower makes default in the payment on the due date and in accordance with the terms and conditions relating thereto of any principal or interest or other moneys outstanding and payable by the borrower under any term loan account (whether demanded or not).

17.  Clause 8 of the 2^nd Mortgage provides that after the security has become enforceable, the lender may appoint a receiver who has the right to take possession of, collect and get in the property and to take the rents and profits thereof.

18.  I am satisfied that the requirements of Order 88 have been complied.

19.  By reason of the default of the 1^st defendant, the plaintiff is entitled to an order for possession of the property.

Order of sale

20.  As the 1^st defendant had made default in payment, the plaintiff as mortgagee became a person holding an interest in the property under s 3 of the Partition Ordinance and may institute the present proceedings: see Maxcolm Finance Ltd v Cheng Chi Man and another [2019] HKCFI 2928 and Moneysq Ltd v Liu Kit Ling and another [2019] HKDC 860.

21.  The property is a residential flat in a multi-storey building with a saleable area of approximately 490 sq ft. I accept Mr Lo’s submission that it is impracticable to divide the property into two halves. Moreover, neither the 1^st nor the 2^nd defendant has tendered any reason by affidavit as to why an order for sale under the Partition Ordinance should not be granted; why it is not impracticable to physically partition the property into two halves; why a sale of the property would not be beneficial to all the parties or that significant hardship would be caused to the 2^nd defendant.

22.  In any event, the 2^nd defendant shall be entitled to half of the proceeds of sale.

23.  Accordingly, I am satisfied that an order of sale ought to be made and I so order.

Reserved price

24.  The plaintiff has produced a valuation report which opined that the value for the sale of the property under repossession as at 4 January 2022 is in the order of HK$5,200,000.

25.  I accept the said valuation and direct that the property shall be sold with a reserved price of HK$5,200,000.

Costs

26.  By summary assessment, I order the 1^st defendant to pay the plaintiff the costs of this action in the sum of HK$80,000.